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Obama Panders to Bagholders in Nevada

9

Pretty familiar story: pour $30 more billion into other people's bad financial decisions. Either don't pay for it at all, or tax the people who didn't make the stupid decisions (what, 98% of the rest of us?)

At a roundtable discussion Tuesday afternoon at the College of Southern Nevada in North Las Vegas, Sen. Obama laid out his plan to provide a $30 billion economic-stimulus package to help homeowners. The package would include a $10 billion foreclosure-prevention fund to help people stay in their homes and $10 billion in relief to state and local governments hardest hit by foreclosure.

The Illinois senator also said he would modify bankruptcy law so families can negotiate the terms of their mortgage and would provide a 10% mortgage tax credit for middle-class Americans.

Obama's position on this is idiotic. Thirty billion cannot possibly replace the trillions of dollars that fueled the bubble, and homes are already ridiculously favored by tax policy -- having been made more ridiculously favored by the recent decision to pretend that forgiven loans aren't income.

HMMM I can't say how I really feel about that moron from Illinois for fear of losing control and getting my account deleted.

I'm spending the night in the hospital with my dying dad. My dad on his death bed is more responsible than most.

However I can relate to some people who have been swindled and wronged by certain lenders, the rules of credit and the abuses of those who have the money to lend to allow some people to realize the dream of home ownership, so i'm a little torn, rather than just give money away I would like to see someone do a real win win situation where we assist but not give hand outs to people and in assisting we generate much needed $$$$ for the government and I say we screw and push out of business these same lenders who have brought our country to the brink of economic ruin.... I say we abolish country wide finance, from what I hear they are among the worst in predatory lending.

Remember if you give a man a fish he may not be hungry tonight, but what about next time,

However if you show that man how to sucessfully fish, well than maybe we will never have to worry about giving out fish...

The same can apply to lending... I wouldn't mind seeing the government take over the mortgage industry, heck I might even come out of retirement to help out. Imagine instead of greedy power hungry mortgage baffoons, we managed to have our country prosper from fair and equitable loans that bring much needed revenues to our government. Maybe if this was really sucessful maybe we could start lowering other taxes.

However I fear that this throwing of money will only be mispent and misappropriated, sort of like filling up a deflated tire that has a 2 inch puncture. Sometimes you have to stop the bleeding before you can start the breathing....

Hopefully Caps will not screw up and this post will not get eliminate due to the system errors caps routinely encounters...

These lenders simply make up rules as they go along, I remember when I was buying my first car in 1990 and although I had the money to outright buy the car, i was talked into getting a loan and I remember how they told me how if I was to have purchased and financed an older vehicle that I would be assessed the going interest rate in the year the car was manufactured total nonsense however if you needed to finance you had to accept such stupidity or look for financing elsewhere...

I'm all for cracking down on lenders, especially the shady buggers. But there's a differece between deceit and wishful thinking, and far too many of the people out there screaming "I didn't understand" now are only playing victim because the stupid bet didn't pay out. We don't compensate people who waste their money on enormous cars, but car salesmen are some of the shadier folks out there. Why should we rescue anyone who fell for a shady lender's pitch?

Fixing the lending market is a pretty simple task:

What really ought to happen is people ought to have to have down payments for homes, and they ought to pay through the nose if they don't have a good credit score. You know, the way they made sure people paid their bills in the old days -- or the lenders took more for taking on the risk.

But now that everyone's had a taste of free, no one on the bad side of it wants to go back to reality. Unfortunately, that's inevitable.

Personally credit score are a joke, again lenders make up rules as they see fit. I agree with the fact that some down payment is necessary, when I worked in the real world not too long ago, I use to rent and sell merchandise to people in some nice homes (because they didnt have the money or credit to furnish said nice domicile) and many simply lived off the loans on said homes. Heck this one shady business owner managed to live an entire year plus without paying on a really nice home and when I was forced to have my guys repo my merchandise he didnt pay on, the guy had his kids trash that nice home, ketchup and mustard as well as other food stains everywhere and I do mean everywhere it was a sad pathetic sight.

I was talking about this with the French. (Oh, I know, you Americans are rolling your eyes, thinking, "who cares about the damned French.") Anyway, there is a cultural difference here.

In France, housing prices have gone up nationally as much as they have in the U.S. over the past 7 years. A big difference, however, is that 7 years ago, prices were very low, except in Paris or on the Mediterranean Coast. In 2000/2001, you could buy an appartment in most smaller cities for the equivalent of 40,000 Euro (back then they still had the franc) or so. Now, those places are well over 100,000 Euro and very difficult for the average French worker to afford.

We lived in San Francisco from 2000 to 2006, and have been in Europe for the past year. We know a lot of people who bought in California and a lot of people who bought in France. In both places, the general population believes that "real estate prices always go up."

Here is the difference: even if the French have stretched to their limits to buy, they had a down payment (20% or more), and they all ran the numbers to know exactly what their payments would be and for how long (longest loan duration of anyone we know is 20 years). No one we know accepted a variable rate loan when they could get a 20-year fixed for about 5%.

In California, the due dilligence we saw was akin to "my payment is lower with this loan." For how long? "I don't know, I'll just refinance if it changes." The justification for this ignorance boiled down to, "everyone else is doing it, it's the only way I can afford to buy, and if I don't buy now, I'll never be able to afford a home." This was the prevailing attitude among well-educated professionals with good salaries.

At the 'subprime' end of the spectrum, I'm sure the mortgage lenders had their way with the buyers. Sure, they went a long as willing suckers, and some of them undoubtedly thought they were "sophisticated investors" (now known as gamblers). Because, in America, if everyone is doing it, it must be OK. And if your "banker" (now known as the guy who is going to sell your loan off before the ink dries) tells you you can afford it, well, he must know. He's a banker, isn't he?

Where Obama has it right in his speech is that none of this would have happened if we had proper bank regulation. And we did have proper bank regulation, but 30 years of "deregulation" stripped away all of the rules that were in place to ensure banks did not put the economy into an overleveraged position.

The net result of these regulations was that people who had no idea what they were doing could not get a loan. The real estate agent could con you into buying a house, but the banker was there to make sure you could afford it. That is what disappeared in the past 5 years. Sure the "ownership society" would have be impeded, but we have seen that the growth in home ownership rates over the past 8 years was largely an illusion anyway.

So, I hate the idea of a bailout, but the only way the "market" gets fixed long term is for proper regulation of the banking industry to be restored. On that score, Obama isn't as ignorant as his bailout talk implies.

He may not be ignorant, but if he's not, he's worse: He's spreading BS to help win the office.

Oh, wait...

Seriously, his 'regulation' talk is merely a sop to those who demand some kind of responsibility from the parties that brought us this Ponzi scheme, execept, of course, the most egregious home-flippers. Everyone on the buying end is a victim to him, because he figures that's how he'll get votes.

He doesn't really want more bank regulation, because if he gets it, home prices will drop even more, loans will be harder to get, and more expensive, and more of his constituency (smug youngsters and urbanites who believe an inexperienced Chicago politico who's never passed a piece of bipartisan legislation can somehow be the new concensus builder) will be locked out of home debtorship than before -- at least until they manage to scrape together a down payment and a credit history.

He's probably smart enough to realize that this plan is worth zilch as far as fixing anything, and its only worth is as a way for him to pretend he cares more than McCain, and just as much as bailout Hillary -- whose poorer, blue-collar fans would be even worse off if banks actually asked for down payments and proper compensation for credit risk. (The end of subprime is going to put those folks back into renting forever, which is good, because there will be plenty to rent.)

The problem is Obama, lumped together with knee-jerk, short-sighted, election-pimping knuckleheads like Schumer, Dodd, Pelosi, and Frank. These guys will together put all of us on the hook for every heartstring-yanking "losing their home" story out there, costing billions while prolonging the problem. Worst of all, it will institutionalize the culture of the one-way bet for everyone, so long as they meet the right sentiments test.

Lose your butt on a bad financial punt? Just make sure its photogenic! In other words, gamble on a house or farm, not stocks.

Too bad McCain came off his hands-off approach to pander as well. His previous "plan" was unintentionally smart (don't do much), but it would have been the cheapest and quickest way to let the market settle the problems the market made.

This is going to be one expensive lesson in the futility of Soviet-style market manipulation. And it's only going to get worse if Obama, Schumer, Frank, et al. get their way and stick taxpayers with half a trillion dollars worth of lousy mortgages via FHA, Fannie, Freddia and state and local purchase plans.

Last I checked, all of the candidates were considering some kind of proposal to save homeowners from foreclosure. Even our Current Peerless Leader Smirky the Wonderchimp gave us all checks he can't really afford to let us cash. So why single out Obama? (Yes, I agree his plan is a sop. So are the plans from the others.)

There is one very big piece missing from this puzzle - what about lender responsibility? What about responsibility for all those buying the sub-prime mortgages, hoping to make a buck?

I agree that homeowners that agreed to sketchy terms don't deserve a bailout. Why do lenders or investment banks who bought those risky mortgages deserve to be bailed out?

Justifying a bailout, er, I mean buyout of a company who foolishly invested billions into sub-prime mortgages by saying that it was too big to fail is almost criminal.

Why should we save the mighty corporation who absolutely knew the risks of their investment without bailing out the dumba$$es who got in over their heads? You bail out one - you have to bail out everyone.

How can we ever progress as a society, economy, civilization if we keep stringing along the weakest links who screw it up for everybody? What ever happened to survival of the fittest? I say - Let them all crash and burn.

I will pay $1,000 to the first politician who stops pandering and actually comes up with solutions to address the problems in this country, ie, lack of an energy policy, crumbling infrastructure, health care system a mess, social security unfunded, medicare a financial disaster, increasing deficits, etc.

Any takers? Obama? Hilary? John? I thought not.

Regarding the whole mortgage mess - there is plenty of disclosure required by consumer law - I just refinanced my own house. However, all the disclosure in the world will be of no value if people can't or won't actually read what they are signing.

Bail them all out? No thank you. Let the pain be spread far and wide - to the banks that made these dubious loans, to the greedy investors who bought CMOs for "yield", to the idiots on Wall Street who peddled this toxic waste, to the rating agencies who facilitated this mess, and to the ignorant and, in many cases greedy "would be" homeowners who took way too much risk.

Home prices will collapse, many new households will find afforable housing and a sharp but painful correction will take place. This is what free market does best.